Interim Results

Amphion Innovations plc

Interim Results for the 6 months to 30 June 2015

London and New York, 3 September 2015 - Amphion Innovations plc (LSE: AMP) ("Amphion" or the "Company"), the developer of medical and technology businesses, today announces its unaudited interim results for the six months to 30 June 2015 (the "Period").

Period Highlights

· Successful IPO of Partner Company Motif Bio plc ("Motif")

· Motif share price valued at 68.75 pence at Period-end, up from 20 pence at its IPO

· Net Asset Value per ordinary share in the Company ("Ordinary Shares") was 12.0p (US $0.19)* at Period-end, an increase from 0.7p ($0.01) per Ordinary Share at 31 December 2014

· Raised £2.1 million through the placing of new Ordinary Shares and the exercise of warrants

· Closed the Period with approximately US $1.7 million in cash

· Reduced total liabilities by US $2.1 million during the Period

Post-Period Highlights

· Motif raised £22 million in July following a placing of new shares with institutional investors

· Independent tests on Motif's antibiotic iclaprim showed it to be effective in vitro against a range of Gram-positive bacteria and 16 times more potent than trimethoprim, an existing synthetic antibiotic used to treat bacterial infections.

· Kromek Group plc ("Kromek") raised £11 million in August through a placing of new ordinary shares.

* Exchange rate at 30 June 2015 - 1.5727.

Richard Morgan, CEO of Amphion Innovations plc commented:

"The dramatic rise in our Net Asset Value per Share was mainly due to the increase in the value of our holdings in Motif. Following its successful IPO in April 2015, Motif concluded a financing in July to raise £22 million, before expenses, in a placing with several leading institutional investors, at a price significantly higher than the IPO price. We believe Motif has a very bright future and is now on its way to becoming a significant player in the antibiotic market, which has a growing need for novel therapies.

"We are committed to working closely with Motif to help it achieve its goals. In addition, we now have the opportunity to move forward one or two other Partner Companies and, for the first time in many years, to begin to explore the possibility of adding to Amphion's portfolio. We look forward to the future with renewed confidence and to being able to report further progress with Motif, DataTern, and other Partner Companies in due course."

Financial Results and Net Asset Value

Following the successful IPO of Motif on London's AIM market in early April, Motif's share price rose sharply from 20 pence at the IPO to 68.75 pence at the end of the reporting period. As a result, the value of Amphion's holdings in Motif rose from US $13.2 million at the end of December to US $46.5 million at the end of June. During the Period, the share price of Kromek also recovered, from 34 pence to 43 pence at the end of June. These two changes, combined with the reduction in total liabilities over the period, were the main factors behind the substantial improvement in Amphion's Net Asset Value per Ordinary Share, over the Period, to 12.3 pence at the end of June. While the prices of both Motif and Kromek have fallen back since the end of June, the pro-forma NAV per Ordinary Share is currently approximately 10 pence per Ordinary Share. Both companies have completed substantial financings and now have significant financial resources relative to their current operating costs.

Revenue for the six-month period ended 30 June 2015 was US $267,601, slightly higher than the US $240,000 recorded in the first half of 2014. Revenue remained at about the same level as last year and below prior periods mainly due to the absence of licensing income from DataTern, the wholly-owned Amphion subsidiary.

We have continued to cut costs wherever possible and the leadership team has continued to work with reduced levels of current cash compensation. Total administrative expenses were lower than last year due in part to lower expenses in DataTern. As a result, the operating loss for the Period was US $1,254,554 compared with US $1,769,275 as reported in the same period of last year.

During the Period, the Company was able to raise capital from the equity capital markets for the first time in seven years. In April, holders of warrants associated with an institutional lender elected to exercise all their warrants, generating approximately £581,000 in net proceeds to the Company. In addition, in June, the Company raised additional capital through a placing of new Ordinary Shares, with net proceeds to the Company of circa £1.54 million before expenses. Partly as a result of these financing activities, total liabilities decreased by over US $2 million over the Period and the cash balance at the end of June was US $1.7 million.

Amphion's holding of intellectual property assets is valued at amortised cost of US $352,558. In addition to the initial purchase of these IP assets from our Partner Company FireStar Software, Amphion has made additional substantial investment in these assets. That investment has been expensed as incurred and the value of those assets continues to be carried only at amortised historical cost. The Directors believe that the realisable value of the intellectual property assets held by DataTern is substantially in excess of the carrying value and the incremental investments being made in the pursuit of infringers of the IP will generate a significant profit. We believe that if we are successful in concluding licensing agreements with the various infringing parties at levels that meet our expectations, the Company's NAV per Ordinary Share would be significantly higher.

Motif

On 2 April 2015, Motif successfully completed its IPO and admission to AIM, raising £2.8 million at 20 pence per ordinary share. On 23 June 2015, Motif concluded a conditional placing of 44 million new ordinary shares at a placing price of 50 pence per ordinary share with institutional investors to raise £22 million. On 22 July 2015, the FDA designated iclaprim as a Qualified Infectious Diseases Product ("QIDP") for hospital acquired bacterial pneumonia ("HABP"). This satisfied the final condition of the placing, with admission of the 44 million new ordinary shares occurring on 27 July 2015. On 22 July 2015, the Company also reported that the FDA had also designated iclaprim as QIDP for acute bacterial skin and skin structure infections ("ABSSSI"), the second of two serious and life threatening infections for which Motif applied for QIDP status. With QIDP designation, iclaprim is now eligible for a total of 10 years of market exclusivity, making this development an important step in continuing to build the value of iclaprim for Motif and our investors.

Recently, on 24 August 2015, Motif announced the results of an independent report from microbiology specialists, JMI Laboratories. The report showed that iclaprim is effective in vitro against a range of Gram-positive bacteria and iclaprim was found to be 16 times more potent than trimethoprim, the only other antibacterial dihydrofolate reductase inhibitor ("DHFRi") administered alone in today's market.

The decision by Motif to focus on its antibiotic programme has proven to be timely given the growing recognition of the worldwide problems caused by resistance. In July 2014, Prime Minister David Cameron announced the launch of a global taskforce, under the leadership of Jim O'Neill, to coordinate an international effort to combat antibiotic resistant superbugs. Prime Minister Cameron commented, "If we fail to act, we are looking at an almost unthinkable scenario where antibiotics no longer work and we are cast back to the dark ages of medicine where treatable infections and injuries can kill once again". Motif's mission is to address this global health crisis by developing new antibiotics that work in different ways to those commonly used today.

Iclaprim has a novel mechanism of action and enjoys a number of important clinical and commercial attributes, such as a low propensity to develop resistance, which has been demonstrated in vitro. Iclaprim was originally developed by Hoffman-La Roche Inc. and completed comprehensive development in 2008, including two Phase 3 trials with over 900 patients being treated, half of whom were treated with this antibiotic. Although the FDA declined to approve the drug at the time, despite having met the original goals agreed with the agency, the FDA confirmed that they were satisfied with the safety profile of iclaprim and this was confirmed in Motif's April meeting with the agency. Motif is now planning to begin a new Phase 3 trial in the next few months and is confident the drug will meet the new endpoints. Subject to the necessary regulatory approvals, Motif intends to begin marketing the drug in 2018.

DataTern and the Intellectual Property Licensing Programme

In April 2014, DataTern received a ruling from the Federal Circuit Court of Appeal ("FCCA"), which its legal advisers considered favorable. Following that ruling, DataTern submitted a request to the FCCA for a reconsideration of certain aspects of the ruling, which were denied in July 2014 and so the ruling received in April became final. As a result, the case in New York was terminated, with the result that the previously unfavorable Markman ruling of August 2012 was, in the case of Microsoft, nullified.

In late December 2014, DataTern received a ruling from the FCCA of its appeal in the MicroStrategy case that our legal advisers considered to be clearly favorable. There are seven defendants in the MicroStrategy case, which is now starting to move ahead. In May 2015 there was a hearing on two summary judgment motions filed by the defendants and a ruling in that hearing has not yet been handed down.

The cases in Texas, which were on hold pending the Microsoft appeal, are expected to move ahead again in the next six months and we expect to have a Claim Construction hearing (often called a Markman hearing) in Texas in 2016. Following some settlements and dismissals there are now 5 defendants remaining in Texas.

Our legal team, supported by our extensive team of technical and patent experts, continues to believe in the strength of the two DataTern patents. Both of these key patents have completed a comprehensive re-examination by the United States Patent and Trademark Office ("USPTO") and successfully emerged both fully validated and with additional claims added. It remains the firm and considered opinion of our team that the two patents are both valid and being infringed by a wide range of companies that are practicing this critical art. We believe that a Claim Construction ruling, which is fully reflective of our interpretation of the claims of the patents, would establish significant infringement by a large number of companies and we believe that we should be able to generate a significant amount of revenue from this asset over the next few years.

Under the revenue sharing agreement with DataTern, FireStar Software (where the technology and patents were originally developed) would share directly in the revenue stream.

Our goal is to arrive at fair licensing agreements with these and other users of the technology in order to give DataTern and FireStar a fair return on the substantial investment they have made. If we are successful, we believe that the value of the net income to DataTern should be substantially in excess of its carrying value.

Building Value in Our Partner Companies

Since flotation, our basic business model has been to start and build companies with high value potential based on innovative and proprietary, but basically proven, technology. Our ability to select good IP and to develop the IP portfolios in each of our Partner Companies is a critical success factor and is getting steadily stronger as we deepen our knowledge and experience in this area. This knowledge underpins Amphion's investment in each Partner Company at the outset and as it develops. However, our primary goal in every company is the development of a successful business model and operating capabilities that can utilise the technology to provide innovative products, generate revenue, and make profits. We continue to see a lot of opportunity to build and, in due course, extract value from our Partner Companies, in addition to the IP licensing programme being pursued directly by DataTern.

Following the successful IPO for Motif on AIM in April 2015, we have the opportunity to advance other Partner Companies and to start to consider, for the first time in over five years, how best to grow the Company in the future.

m2m is poised to make good progress. We anticipate being able to expand the core business and we can see a number of ways in which we can enlarge and improve the scope of the business by combining with other emerging companies. MRI is a medical imaging modality that is being increasingly used in pre-clinical investigations as well as for clinical diagnostics. m2m has a number of patents on the technology which is aimed at improving the diagnostic quality of MRI images, and the company's leadership has identified a number of pathways to expand its footprint in the general area.

Despite repeated profit warnings since Kromek's IPO, and the disappointing performance of the share price, we continue to believe that the company's technology platform has great potential. With the acquisition of eV Products in 2013, Kromek gained one of the leading cadmium zinc telluride ("CZT") production capabilities in the world. As the cost of producing this material becomes competitive with scintillator technology, the opportunity exists for a lasting shift to CZT-based detector systems, bringing the benefits of multispectral imaging to CT systems and nuclear medicine where SPECT is used. Kromek has recently completed a follow-on financing with institutional and other investors, raising approximately £11 million before expenses through a placing of new ordinary shares at 25 pence. Following the placing, Amphion's ownership in Kromek has decreased to approximately 5.75%.

In April 2014, the case Axcess brought against Baker & Botts LLP, the law firm, went to the jury which returned a verdict in favour of Axcess of US $40.5 million. The judge then overruled this verdict. Axcess is in the process of pursuing an appeal to the Texas Court of Appeals, which should be heard in the next six months. In parallel, we have worked closely with Axcess' legal advisers to evaluate the extent to which all 13 patents in its portfolio are being infringed. It is clear that many companies are now offering products or services that incorporate some of the basic wireless technology developed by Axcess over the last 15 years. A number of companies in the transportation, security, and other sectors appear to be infringing one or more of these patents and the company has recently initiated a claim for a licence from one of the Fortune 500 companies where the analysis shows this to be the case.

FireStar has continued to work on the development of its patented technology, which was also the basis of the formation of PrivateMarkets and is incorporated in its EdgeNode™ product. PrivateMarkets, an Amphion Partner Company, offers an Internet-based marketplace that links together a network of potential buyers and sellers who trade specific physical commodities. EdgeNode enables companies to facilitate low-cost, secure, machine-to-machine messaging, in a novel architecture, which is well suited to the needs of the healthcare and financial industries. The current focus is moving increasingly towards healthcare and in particular the potential productivity gains that should be possible with use of the technology in managing data and images so vital to clinical trials. With this change in focus we may consider the opportunity to reintegrate the trading applications licensed to PrivateMarkets back into FireStar so that all the technology rights reside in the same company.

WellGen continues to explore the opportunity to develop a novel functional beverage based on its patented anti-inflammatory ingredient. The market for such products has been expanding rapidly in recent years. The company signed a joint venture and supply agreement with a US-based sports drink company that has established distribution channels in the Mid-West of the United States, with an opportunity to expand to other US markets and beyond.

Prospects

The success of the Motif IPO and the subsequent increase in the value of our holding in Motif has been the driver behind a significant increase in our Net Asset Value. It has also demonstrated the value of our patient and persistent approach to the development of our Partner Companies. Despite the sharp increase in Motif's share price since the IPO, we believe that it should be valued more in-line with comparable companies trading on Nasdaq and that our holding could be worth considerably more than the level shown on the balance sheet at the end of the period. We continue to work closely with Motif to develop the business and close the valuation gap.

The Board and management have supported Amphion through several lean years but the fact that we have been able to raise fresh equity capital is an encouraging development. Our stated goal is to reduce the level of gearing or leverage on our balance sheet and we are committed to doing so in ways that preserve as much of the shareholder value we have managed to create through this support. Following these developments, the Board is encouraged to progress with the development of Amphion's other Partner Companies and the IP licensing programme, and looks forward to the future with confidence.

For further information please contact:

Amphion InnovationsCharlie Morgan+1 212 210 6224Yellow Jersey PR Dominic Barretto / Charles Goodwin+44 (0)7747 788 211Panmure Gordon Limited Freddy Crossley / Fred Walsh (Corporate Finance)Charlie Leigh-Pemberton (Corporate Broking)+44 020 7886 2500

Northland Capital Partners Limited (Joint Corporate Broker) Gerry Beaney / David Hignell (Corporate Finance)John Howes/ Mark Treharne (Corporate Broking)+44 020 7382 1100

Plumtree Capital Limited Stephen Austin+44 020 7183 2493+646 568 7502

1. General information

The condensed consolidated interim financial statements for the six months ended 30 June 2015 are unaudited and do not constitute statutory accounts within the meaning of the Isle of Man Companies Act 2006. The statutory accounts of Amphion Innovations plc for the year ended 31 December 2014 have been filed with the Registrar of Companies and contain an unqualified audit report which includes an emphasis of matter relating to significant uncertainty in respect of going concern and valuation of Partner Company investments. Copies are available on the company's website at www.amphionplc.com/reports.php.

2. Accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS).

The accounting policies applied by the Group are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2014. Changes to accounting standards in the current year had no material impact.

3. Use of judgements and estimates

The preparation of the Group's interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies at the date of the Group's interim financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group's financial statements include the amounts recorded for the fair value of the financial instruments and other receivables. By their nature, these estimates and assumptions are subject to an inherent measurement of uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.

Investments that are fair valued through profit or loss, as detailed in note 8, are all considered to be "Partner Companies". Those "Partner Companies" categorised as Level 3 are defined as investment in "Private Companies".

Fair value of financial instruments

The Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market ("Private Investments"). The estimation of fair value of these Private Investments includes a number of assumptions which are not supported by observable market inputs. The carrying amount of the Private Investments is US $9 million.

Fair value of other receivables

Other receivables are stated at their amortised cost which approximates their fair value and are reduced by appropriate allowances for estimated irrecoverable amounts and do not carry any interest. The recovery of the advisory fees due at 30 June 2015 of US $0.9 million is dependent on a number of uncertain factors including the ability of the Partner Companies to raise finances (through current investors and new financing rounds) in order to support the future growth plans and therefore generate enough cash to be able to settle any outstanding debts.

4. Revenue

An analysis of the Group's revenue is as follows:

A provision for doubtful accounts has been set up for US $120,000 for the advisory fees accrued from Partner Companies and US $120,000 of bad debt expense was recognised in the statement of comprehensive income.

As part of the agreement for DataTern, Inc. to purchase certain of the intangible assets in December 2007, a portion of future revenues from these patents will be retained by FireStar Software, Inc. No amounts have become payable to FireStar Software, Inc. to date.

5. Segment information

For management purposes, the Group is currently organised into three business segments - advisory services, investing, and intellectual property. These business segments are the basis on which the Group reports its primary segment information.

Information regarding these segments is presented below.

5. Segment information, (continued)

For management purposes for 30 June 2014, the Group was organised into three business segments - advisory services, investing activities, and intellectual property.

5. Segment information, (continued)

Geographical segments

The Group's operations are located in the United States and the United Kingdom.

The following table provides an analysis of the Group's advisory fees by geographical location of the investment.

The following table provides an analysis of the Group's license fees by geographical location.

The following is an analysis of the carrying amount of segment assets, and additions to fixtures, fittings, and equipment, analysed by the geographical area in which the assets are located:

 6. Income tax expense

From 6 April 2006, a standard rate of corporate income tax of 0% applies to Isle of Man companies, with exceptions taxable at the 10% rate, namely licensed banks in respect of deposit-taking business, companies that profit from land and property in the Isle of Man and companies that elect to pay tax at the 10% rate. No provision for Isle of Man taxation is therefore required. The Company is treated as a Partnership for U.S. federal and state income tax purposes and, accordingly, its income or loss is taxable directly to its partners.

The Company has three subsidiaries, two in the USA and one in the Kingdom of Bahrain. The US subsidiaries, Amphion Innovations US Inc. and DataTern, Inc., are Corporations and therefore taxed directly. The US subsidiaries suffer US federal tax, state tax, and New York City tax on their taxable net income.

The Group charge for the period can be reconciled to the profit per the consolidated income statement as follows:

7. Earnings per share

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:

Share options that could potentially dilute basic earnings per share in the future have not been included in the calculation of dilute earnings per share because they are antidilutive.8. Investments

At fair value through profit or loss

The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. In the case of the Company, investments classified as Level 1 have been valued based on a quoted price in an active market. Investments classified as Level 2 have been valued using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Fair values of unquoted investments classified as Level 3 in the fair value hierarchy have been determined in part or in full by valuation techniques that are not supported by observable market prices or rates. Investment valuations for Level 3 investments have been arrived at using a variety of valuation techniques and assumptions. For instance where the fair values are based upon the most recent market transaction but which occurred more than twelve months previously, the investments are classified as Level 3 in the fair value hierarchy.

The net increase in fair value for the six months ended 30 June 2015 of US $34,807,904 is from the change in value of the public companies and is based on quoted prices in active markets.

During 2015, securities with a carrying value of $46,528,082 at 30 June 2015 were transferred from Level 3 to Level 1 because the securities were listed on the AIM of the London Stock Exchange in April 2015 and are actively traded in the market. The securities now have a published price quotation in an active market.

In June 2015, the Company sold 779,642 shares of Kromek Group plc for total net proceeds of US $392,314 to partially repay the loan facility.

In June 2015, the Company transferred 2,843,126 shares of Kromek Group plc to a noteholder in exchange of US $1,042,724 of convertible promissory notes. The exchange rights gave the noteholder the right to exchange part or the whole note into Kromek shares.

Fair value determination

The Directors have valued the investments in accordance with the guidance laid down in the International Private Equity and Venture Capital Valuation Guidelines. The inputs used to derive the investment valuations are based on

8. Investments, (continued)

estimates and judgements made by management which are subject to inherent uncertainty. As such the carrying value in the financial statements at 30 June 2015 may differ materially from the amount that could be realised in an orderly transaction between willing market participants on the reporting date.

In making their assessment of fair value at 30 June 2015, management has considered the total exposure to each entity including equity, warrants, options, promissory notes, and receivables.

Further information in relation to the directly held private investment portfolio at 30 June 2015 is set out below:

Given the range of techniques and inputs used in the valuation process and the fact that in most cases more than one approach is used, a sensitivity analysis is not considered to be a practical or meaningful disclosure. Shareholders should note however that increases or decreases in any of the inputs listed above in isolation may result in higher or lower fair value measurements.

9. Other financial assets and liabilities

The carrying amounts of the Group's financial assets and financial liabilities at the statement of financial position date are as follows.